THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

WOLF BLITZER, HOST: We're going to continue to watch the fallout -- very dramatic emotional moments that we all saw live here in the courtroom in Fort Lauderdale. This judge making a decision where the remains, where the body of Anna Nicole Smith will be buried. The judge, Larry Seidlin, often close to tears, choking back tears, making the decision that Richard Milstein, the guardian -- the attorney representing Dannielynne, the baby who was born only about a half a year or so ago in the Bahamas, that he would get custody and he wants Anna Nicole Smith's body buried in the Bahamas.

We've watched it all unfold.

Susan Candiotti is outside the courthouse in Fort Lauderdale.

She watched it, as well -- Susan, I think it's fair to say most of us have never seen anything like this, certainly not on television.

SUSAN CANDIOTTI, CNN CORRESPONDENT: I think most people have been flabbergasted to see how this case has played out over the past several days. And certainly this is another example of an unorthodox way that Judge Seidlin maintains his courtroom.

He announced suddenly that he was going to make this decision in about 15 minutes, when all along he had been telling everyone it was going to be tomorrow. He said I like surprises and I'm going to surprise all of you.

And then he did what probably a lot of people didn't expect. He didn't go with Stern, who says he's the father. He didn't go with the mother, who says I want to take her back to Texas. No.

He flagged this early on. He has deferred to the attorney representing the baby's interests throughout this proceeding. He has said throughout that this attorney doesn't have a horse in this race, he's an independent thinker, he's not tied to anybody, he doesn't know any of the parties.

He said I am letting you decide who should get -- where this woman, Anna Nicole Smith, should be buried.

Although the judge did say emphatically, I want her buried with her son. He said throughout, I think it's pretty clear that's what her wishes were.

And then he said this. I'm not going to say another word about this case. I want nothing else to do with it after I make this lengthy ruling. There's a written order here. He said I relinquish everything else about this case to a family court judge -- he's a probate judge -- to a family court judge here, that we met early on, last week.

And he said I'm turning it over to Judge Lawrence Korda and let him try to decide how to handle this matter of paternity and who the father is.

The judge said, "Enough baloney here." He said, "I've had enough of it," in his words. Someone should find out who the father is -- Wolf, it's been remarkable.

BLITZER: I'm going to play, Susan, for our viewers who may have missed it, the judge, in his own words, announcing his decision.

Let's listen to this videotape.

(BEGIN VIDEO CLIP)

JUDGE LARRY SEIDLIN, BROWARD COUNTY DISTRICT COURT: This is not -- this is not a happy moment. I want her buried with her son in the Bahamas. I want them to be together.

(CRYING)

(END VIDEO CLIP)

BLITZER: That was it. That was the judge making his decision.

And, Susan, it's clear that he was a very narrowly focused decision on the body, where the body should go, who should have custody of the body. He made no decisions as far as paternity of the baby, Dannielynne. He made no other decisions. This was strictly on who gets custody of the body.

CANDIOTTI: That's what all of this was about from the very beginning. But that matter of paternity did creep in time and again. It was pretty hard to avoid it in the testimony here, at least the way the judge was allowing the testimony to take place.

For example, that's why Larry Birkhead, who really is not a party to any of this, but he claims to be the father of that child, that's why the judge said I am going to allow him to testify.

But you're right, the judge now has washed his hands of this matter, now that he's decided who should determine where the body should be buried. And he's leaving that up to the attorney representing the baby, Dannielynne.

However, the judge said I am ordering this attorney to meet with all the parties here -- Howard K. Stern, with the mother and with Larry Birkhead -- to consult with them. But he instructed this attorney that you will make the final decision.

BLITZER: Susan, stand by for a moment. Larry King is joining us on the phone -- Larry, you've spent a lot of time looking at this case. You've -- you knew Anna Nicole Smith.

Give us your thoughts right now on what has happened.

LARRY KING, HOST, "LARRY KING LIVE": Well, I'm a little -- I'm a little weird. I feel a little weird. First, he didn't order the baby to be buried in the Bahamas, right?

He recommended it.

BLITZER: Right. That's what he recommended.

KING: He could have ordered it, right?

BLITZER: I -- I assume he could have ordered it, but he said it's up to the attorney, the attorney representing Dannielynne, this little baby, the guardian of the attorney. He strongly recommended that the baby be buried next to her 20-year-old son who died, what, about six or eight months ago.

KING: Then how -- OK, let's say he strongly recommends it. Now this attorney gets together with the three warring parties. Let's assume they don't come to any agreement.

Can the -- can that attorney now say to hell with all of you, I'm burying -- I'm burying her in the Bahamas?

BLITZER: Well, let me ask Jeff Toobin.

He's with us, as well, our senior legal analyst -- Jeff, what do you think?

Because I suspect you have never seen a judge in action like this before either.

JEFFREY TOOBIN, CNN SENIOR LEGAL ANALYST: I feel like I should apologize for being the only person who wasn't crying during the -- during the issuance of the ruling.

I mean, it is a very confusing ruling, because it sounded like, for the first half of the ruling, that he was simply leaving the matter of where to bury Anna Nicole with Milstein, who is the guardian of Dannielynne, the little baby. And that actually makes a certain amount of sense, if he really is going to be -- going to be the heir -- if Dannielynne is the heir and he speaks for her.

However, he then added that he wants her buried in the Bahamas, which means that Howard K. Stern wins and the mother loses.

So I don't really understand how he could sort of -- how he could make the ruling that he did. I guess we have to read -- read the whole thing.

BLITZER: But he specifically rejected the appeal from Howard K. Stern, the long time companion of Anna Nicole Smith, he rejected his appeal that he get custody of the body.

TOOBIN: Right. But all Stern wanted with custody was to bury her in the Bahamas next to her son. So Stern got the result he wanted, just not custody to -- to reach that goal. And...

BLITZER: And what about Larry's question.

KING: (UNINTELLIGIBLE)...

BLITZER: Larry, hold on one second.

I just want to pick Jeff's brain for a second.

Larry has got a good question.

What if the attorney, Richard Milstein, the guardian representing this little baby, decides he wants to bury Anna Nicole Smith some place else?

TOOBIN: That's why -- I mean, I think it's a really good question, because given -- if she really is the guardian and if she -- I mean if Milstein really is the guardian and Milstein has total control of this issue, it seems to me like he could bury her somewhere else because he, very clearly, is in charge.

BLITZER: All right, Larry, what do you think?

KING: Well, I have a question for Jeffrey.

Why wasn't this in family court in the first place?

TOOBIN: Well, because the specific issue of -- of the disposition of the body is a matter for probate in Florida. It's not -- it's not a custody issue, like a child custody issue, which -- or a paternity issue. That goes in Florida -- that goes in family court. And apparently that's where the court is going to shift jurisdiction now.

However, there is a California court that is also asserting jurisdiction over the paternity question. So it's not clear who's going to be -- who's going to control that.

But I do think DNA tests are going to get done and paternity is going to be issued -- going to be decided with certainty in one court or another...

KING: Since the body is decomposing -- the body is decomposing, right?

BLITZER: Right.

TOOBIN: Well, that's the other issue is that, you know...

KING: So don't they have to do this...

TOOBIN: ... there is a certain element of beat the clock. KING: ... rather quickly?

TOOBIN: One of the issues or surreal aspects of this proceeding is that the medical examiner would call in to the judge every few hours and say hey, this body is getting worse. You've got to make a decision.

So, he said it had to be done by tomorrow. So presumably the burial will take place in the next couple of days.

KING: You know, Wolf, the tragedy is that this -- she had an up and down tragic life, the tragic death of her son. And this is a surreal comedy -- probably a fitting tragic, semi-end to this story.

BLITZER: It's not over with yet, Larry, because they still haven't gotten to the issue of the father, the father of this baby. That's still a matter before the courts and presumably the respective men who claim to the be the father, eventually they're going to have to submit DNA.

KING: Can we say, Wolf, that this was sort of semi-not decided today?

BLITZER: Right. I think that's a good way of saying it, Larry.

The plot -- the story continues. And it's by no means over, even though this judge, Larry Seidlin, was so dramatic, so extraordinary, very unusual in many respects.

KING: (UNINTELLIGIBLE)...

BLITZER: In fact, Larry hold on a second.

Jeff, hold on.

I'm going to play a little bit of what he did earlier in the day.

(BEGIN VIDEO CLIP)

SEIDLIN: When I pronounce the final resolution to this case, I want you to understand that I've reviewed absolutely everything. I have suffered with this. I have struggled with this. I have shed tears for your -- your little girl and your grandchild.

But I hope -- because I'll tell you something, in the old days I'd be banging some heads together. I mean it. You all really should do the right thing by this Danni -- Dannielynne.

(END VIDEO CLIP)

BLITZER: Larry, have you ever seen a judge like that before?

KING: No. I -- the big word now is in -- the general thinking is he's going to be a -- Judge Larry is going to be a male Judge Judy, that he is already pitching to host a television show. It would not surprise me if he got it. BLITZER: Well, we learned a lot about him and his personal life, Jeff, including the fact that when he plays tennis, that he likes to wear white shorts and a white shirt, you know, details...

TOOBIN: And we learned he...

BLITZER: ... details like that.

TOOBIN: We learned he didn't have his first kid until he was 50 and he loves Florida.

No, it was certainly a surreal judicial experience and I've never seen a judge sort of emote like that on the bench and reveal as much of himself as he has.

But, you know, he also -- you know, he only really controlled a very small corner of the massive litigation that is likely to stem from her case. I mean as Larry said, I mean there's paternity, but hovering over the whole thing is the disposition of Howard Marshall's will. I mean that's -- you know, I think a lot of people believe that's what this is really about.

BLITZER: This is potentially about hundreds of millions of dollars.

TOOBIN: Well, it seems to me it's at least $88 million that she's due, and it could be quite a bit more. And, you know, for all of the tears that everybody is shedding over Anna Nicole and -- a lot of people think whatever -- what's going on in that courtroom is a grab for the money, not really a great deal of concern for her body.

KING: Wolf, I've got to run but I will add that the judge fit the whole story. He kind of fit this whole picture, the bizarre nature of it all.

I've got to run.

But, Wolf, I'll see you Monday night in Washington.

BLITZER: All right, great.

Larry King is going to be doing a lot on this tonight on "LARRY KING LIVE," 9:00 p.m. Eastern.

Larry, see you in Washington on Monday.

I know you have a very special guest coming up here in Washington for that.

Jeff, let me just continue with you briefly, because let's go -- move this story ahead.

We're waiting, by the way -- we expect some of the family members, some of the attorneys, some of the other stories who emerged come out to those microphones there and maybe make some statements.

We'll watch that closely.

But explain to our viewers, assuming this attorney, Richard Milstein, the guardian now for this little baby girl, Dannielynne, decides that she's going to be buried next to her son in the Bahamas.

What happens then?

Who has jurisdiction as far as not only the paternity, but the issue of the money, the will?

TOOBIN: Well, the -- presumably -- I mean if the burial goes forward, that -- that part of the case is closed. She will simply be buried in the Bahamas next to her son. And then the two major outstanding issues are who's the father of Dannielynne, this now six - month -old baby? And what's become of Anna Nicole's interest in her ex-husband -- her late husband's estate?

The paternity is the one thing in this case that is likely -- that is certainly going to be resolved with certainty. I mean they will do DNA tests and we will find out whether it is Larry Birkhead, the boyfriend; Howard Stern, the partner/some time husband of sorts; or Zsa Zsa Gabor's husband or anyone else who claims paternity.

That will be resolved. It's not clear whether it's going to be resolved in the California courts or the Florida courts, but it'll be resolved.

At that point, Anna Nicole's will will have to be adjudicated. They'll have to find out who her heirs are and then whoever controls her estate will pursue the litigation in California over the will. And that was the case that was sent back by the Supreme Court to the California federal courts and then that will -- Anna Nicole's heirs, whoever they may be, will resume the fight with the children -- with the daughter-in-law of her late -- her late husband, because the son that she had fought for so many years in court has actually died in the interim.

BLITZER: Jeff, hold on for one second.

I just want to touch back with Susan Candiotti for a moment.

Susan, you're there in Fort Lauderdale. You're watching all of this unfold.

It must be a media circus outside that federal courthouse.

CANDIOTTI: Well, clearly, the crowds are now starting to gather, Wolf, as people are starting to find out that now the judge has made a ruling. And so everyone is gathering around to see what all the parties are going to say.

But if I might add this. You know, in listening to the testimony, there was a lot of questioning on the part of the guardian representing Dannielynne, the baby, in the past several days, in which he was asking a lot of questions of Howard Stern and whether he had been compensated, received any compensation for any interviews. He asked the same question of Larry Birkhead, both men who claim to be the father of Dannielynne.

And he really zeroed in, as well, on Larry Birkhead, asking him -- including today -- what would you do with the body if you were -- if you turned out to be the biological father? And what would you do -- where would you live with Dannielynne?

And he got answers from Birkhead, who said he was struggling with what he would do and where he thought Anna Nicole Smith should be buried. He knew that she wanted to be in the Bahamas. He knew she wanted to be near her son, but he said I live in California and, you know, I'd want the baby to live with me, if I turn out to be the father, in California. Yet I don't want her to be far away from her mother.

So, these -- this is an issue that clearly troubled the attorney representing Dannielynne's interests and something I'm sure he will take into consideration as he consults with Birkhead, the mother and Stern.

How he's going to bring all those parties together, I don't know.

Now, the mother and Birkhead seem to be siding together. But Stern is definitely on the other end of things. So, whether he will get them to agree to anything is another matter altogether.

BLITZER: I don't know if you know the answer to this. I see an emergency vehicle behind you, a rescue vehicle, a paramedic -- a couple of paramedics. I think I just saw them walking into the federal courthouse. We know that one of the attorneys collapsed earlier, a diabetic, low sugar, apparently.

Do we have any idea what's going on behind you -- Susan.

CANDIOTTI: No, here at the county courthouse, we don't know why the ambulance has just pulled up. But you're right, we did have a bit of a scare -- although no ambulance showed up for that -- when one of the lawyers who represents the mother, Virgie Arthur, collapsed. He fell into a bit of diabetic shock for lack of sugar.

He was all right. In fact, one of our own employees gave him a candy bar to help bring him out of it and he was all right. They took a lunch recess and everything was fine.

But this is just indicative of yet something else that's happening -- we don't know precisely what -- as everyone is gathering to hear reaction from all the parties once they leave the courthouse.

We're expecting to see Howard Stern, who has been guarded by bodyguards, who have been escorting him in and out of the courthouse each day; his lawyers. You have 18 lawyers altogether represented here.

Virgie Arthur, who has never addressed any of the media's questions at all.

Larry Birkhead has often stopped, as has his lawyer, to speak to reporters.

So when they come out, I would suspect -- strongly suspect that we'll hear from them.

We might also hear from some friends of Anna Nicole Smith about what they think about what happened, as well. We know that they were here -- some people were here and wanted to testify and were not permitted to.

So, a lot happening here. A lot of attention being brought to this and a lot of people naturally surprised that this has happened one day earlier than everyone had expected.

BLITZER: And we just saw some paramedics bring in a stretcher into that building behind you. I don't know if you saw that, Susan, but clearly someone is not feeling all that well inside. We have no idea who that might be. We'll watch this.

I want to just play another clip, Susan, of what the judge, Larry Seidlin, said earlier as he was getting ready with his decision.

(BEGIN VIDEO CLIP)

SEIDLIN: And I hope to god you guys give the kid the right shot.

I signed this order effective almost 4:00. It's a long order. It's a long order.

(END VIDEO CLIP)

BLITZER: And he then went on, choking back tears, Susan, to go ahead and read the order, effectively giving custody of the body to the guardian for the baby, Dannielynne.

Dannielynne, I assume, is in the Bahamas. That's based on all the information we have.

Is that right, Susan?

CANDIOTTI: She is. She has been left in the care of nannies who have been taking care of her since Mr. Stern has been here. And there's also a court order that keeps her there in the Bahamas. That was one of the things, talking about paternity matters and taking DNA, a discussion as to whether she should be made -- brought to the United States to have DNA samples taken from her then other talks saying, you know, that doesn't make any sense. You can just as easily take a sample from her there and then use that as part of any paternity test.

But if I may say this. You know, we've learned a lot about the judge in the past week-and-a-half or so. And he used to be a family court judge. He has said that many times. And he has emphasized time and again that he cars very much about what happens to the children that have gone through his courtrooms over the years.

And what's also interesting to note is that when all of this started, Judge Seidlin said I have never heard of Anna Nicole Smith. I don't know a thing about her. My wife follows this type of thing.

And yet we see the transition in this man. By the end of the trial, some say in an over dramatic fashion, others would say this is how he is, to wind up crying about her at the very end. Dannielynne, that is to say, and what will happen to her. That clearly is uppermost in her mind, that he wants whatever decision that is made here to be in her best interests...

BLITZER: Well, I'm going to interrupt...

CANDIOTTI: ... so that she is not hurt.

BLITZER: ... for a moment.

We see the...

CANDIOTTI: He said, in the end, I don't want her...

BLITZER: Susan, hold on.

CANDIOTTI: ... I don't want her to be a dysfunctional child.

Right.

BLITZER: I see the stretcher being removed now, but fortunately no one is on top, just some medical equipment. So hopefully no one is seriously ill right now or suffering, because the stretcher went in with the paramedics, it's now leaving without anyone on that stretcher, which presumably is very good news, as far as someone taking ill inside that courthouse behind you.

All right, Susan, I'm going to take a quick break.

I want to make sure that we get an opportunity to hear what the various parties might say, their reaction to this judge's decision.

We'll watch that courthouse. We'll watch the microphones. We're also going to make sure we don't neglect other important news happening here in THE SITUATION ROOM.

Jack Cafferty is off today.

Among the stories we're covering, why is the White House so disappointed now by a new U.N. report on Iran's nuclear program?

The findings and the fears. That's coming up.

Also, much more on the Clinton-Obama food fight.

Does either of them come out a winner, or are they both left with stains?

Is it a question of electability or is there more? Stay with us. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: We're standing by. We expect to hear from Dr. Joshua Perper. He's the chief medical examiner in Broward County. And it's where Fort Lauderdale is. We expect to hear from him, to emerge from the courthouse and to speak about the disposition of the body of Anna Nicole Smith. We'll get there as soon as he emerges.

We're watching to also get reaction from the respective parties on the judge's decision to go ahead and give custody of Anna Nicole Smith's body to the guardian of the baby, Dannielynne, six-months-old. She's in the Bahamas right now. The judge recommending that she be buried in the Bahamas.

We'll watch this. We'll get you updated as soon as we know more.

There's other news we're following, though.

Right now, Senator Hillary Clinton is in the backyard of the movie mogul who produced high drama in the Democratic presidential race. She's in California for a big money fundraiser in L.A. tonight. And you can bet her supporters will be buzzing about the first big feud of the 2008 campaign. Or, as the "New York Post" is dubbing it, "the big chill."

Senator Clinton's uncivil war with rival Barack Obama and "Hoover" producer David Geffen is still casting a red hot spotlight on questions about her electability. And it's not just the heavy baggage from her husband's administration that potentially, at least according to her critics, could bring her down.

At the latest gathering of Democratic presidential hopefuls, Senator Clinton took some sharp jabs from her rivals on the issue of Iraq. But she's still refusing to apologize for voting to authorize the war.

WILLIAM SCHNEIDER, CNN SENIOR POLITICAL ANALYST: Wolf, the long- term impact of the dustup between the Clinton and Obama campaigns probably no big deal. But the issue it raises, big deal.

(BEGIN VIDEO TAPE)

SCHNEIDER (voice-over): The Tinseltown tussle between the Clinton and Obama campaigns -- what does it all mean?

Like a billboard on the Sunset Strip, it showcases a big issue in the primary campaign.

STUART ROTHENBERG, "ROTHENBERG POLITICAL REPORT": (AUDIO GAP) Senator Clinton and there are some Democrats that wonder if either one can win.

SCHNEIDER: Obama supporter David Geffen raised the issue front and center about Senator Clinton. He called her "incredibly polarizing" and said "Republicans believe she's the easiest to defeat."

The Clinton campaign's tough response sent a signal.

MARK PRESTON, CNN POLITICAL EDITOR: For Hillary Clinton, it shows that she is willing to hit back when somebody comes after her.

SCHNEIDER: Does she have that much political baggage?

The issue is now on the table.

Obama had denounced what he called slash and burn politics just last Sunday. But his campaign issued a slashing attack on Clinton before getting back on the high road.

SEN. BARACK OBAMA (D), ILLINOIS: I have the utmost respect for Senator Clinton and, you know, have considered her an ally in the Senate.

SCHNEIDER: Is Obama really a different kind of politician?

The issue is now on the table. In a polarized political environment, there's a lot more strategic voting in the primaries.

ROTHENBERG: Democrats want a winner and it's not just the party insiders, and it's not just the political consultants, it's real people, real voters. And so I think electability will be a crucial issue.

SCHNEIDER: The rule in politics is that when Candidate A and Candidate B start attacking each other, the benefit goes to Candidate C.

PRESTON: I think that if we continue to see an ongoing feud between Hillary Clinton and Barack Obama, then someone like John Edwards is going to come out in front.

(END VIDEO TAPE)

SCHNEIDER: Do the polls say anything about who is electable?

Five national polls have come out this month, pitting Clinton and Obama against the Republican frontrunners, Rudy Giuliani and John McCain.

The results?

All very close, usually within the margin of error. Nobody's unelectable, but nobody's a sure winner, either -- Wolf.

BLITZER: And it's still very, very early in the process. But this food fight obviously having some ramifications. Bill, thank you for that.

Let's get to Senator Clinton's so-called Iraq problem.

(AUDIO GAP)

Congressional correspondent Dana Bash followed most of the Democratic contenders to Nevada -- Dana.

DANA BASH, CNN CORRESPONDENT: Wolf, the war of words between the Clinton and Obama campaigns drowned out an early dynamic on display here in Nevada, and that is Hillary Clinton on the defensive about her 2002 vote to authorize war in Iraq.

(BEGIN VIDEO TAPE)

BASH (voice-over): For the umpteenth time, Hillary Clinton was asked why she won't disavow her 2002 vote for war in Iraq and for the umpteenth time, she refused.

SEN. HILLARY RODHAM CLINTON (D), NEW YORK: I have taken responsibility for my vote.

BASH: What was different here was that Hillary Clinton was joined by three other candidates who also voted yes, but say they regret it.

SEN. CHRIS DODD (D), CONNECTICUT: It was a mistake, in my view, to vote the way we did five years ago on that resolution.

FORMER SENATOR JOHN EDWARDS, PRESIDENTIAL CANDIDATE: I voted for this war. I was wrong to vote for this war. I should never have voted for this war. I take responsibility for that.

BASH: Senator Edwards did not want to leave the obvious contrast with Hillary Clinton to chance and took a swipe at her.

EDWARDS: We need a leader who will be...

(APPLAUSE)

EDWARDS: ... who will be open and honest with you and with the American people, who will tell the truth, who will tell the truth when they have made a mistake, who will take responsibility when they have made a mistake.

BASH: When asked why he thinks Clinton won't use the M word Senator Chris Dodd was a bit more gentle.

DODD: I made a mistake and I don't know. They're two very reasonable answers to questions. When you make a mistake, there's nothing wrong with admitting that, in my view.

BASH: There was one candidate on the stage who has no regrets, because he voted against the war in Iraq.

REP. DENNIS KUCINICH (D), PRESIDENTIAL CANDIDATE: People are looking for a president who has the ability to do the right thing when it matters the most, and I've demonstrated that.

(END VIDEO TAPE)

BASH: After once again refusing to call her Iraq vote a mistake, Hillary Clinton quickly pivoted to what she calls her plan to end the war. The open question is whether that's going to be enough to satisfy staunch war opponents who will help pick a Democratic nominee for president in this state and in early contests across the country -- Wolf.

BLITZER: Dana in Carson City, Nevada.

Thanks, Dana, for that.

The House speaker, Nancy Pelosi, is sending an angry message to President Bush about Vice President Dick Cheney. Pelosi and Cheney are accusing one another of hitting below the belt when it comes to the war in Iraq.

Here is our congressional correspondent, Andrea Koppel -- Andrea.

ANDREA KOPPEL, CNN CONGRESSIONAL CORRESPONDENT: Wolf, Speaker Pelosi is calling on President Bush to, in her words, repudiate and distance himself from the vice president's remarks. Speaker Pelosi is calling on President Bush to move on beyond those remarks, and actually make good on a promise that he had told her, to actually pick up the phone whenever she wanted to and call him if she felt that people were impugning the Democrats on Iraq.

(BEGIN VIDEOTAPE)

KOPPEL (voice-over): The vice president threw the first punch.

(BEGIN VIDEO CLIP, ABC NEWS)

RICHARD B. CHENEY, VICE PRESIDENT OF THE UNITED STATES: I think, in fact, if we were to do what Speaker Pelosi and Congressman Murtha are suggesting, all we will do is validate the al Qaeda strategy. The al Qaeda strategy is to break the will of the American people.

(END VIDEO CLIP)

KOPPEL: In an interview with ABC News during a swing through Asia this week, Mr. Cheney criticized a plan by Pennsylvania Democrat John Murtha to condition future funds for the war in Iraq on adequate training and equipment for U.S. troops. He also took a direct swipe at Speaker Nancy Pelosi.

(BEGIN VIDEO CLIP, ABC NEWS)

CHENEY: I think to do what Nancy Pelosi is suggesting -- and she's made it very clear on many occasions that she, in fact, wants to get out -- that that's exactly the wrong medicine. It's the wrong course of action. It will do nothing but encourage the terrorists.

(END VIDEO CLIP)

KOPPEL: Pelosi punched back.

REP. NANCY PELOSI (D-CA), SPEAKER OF THE HOUSE: The vice president's statements are beneath the dignity of the debate that we're engaged in. They're a disservice to our men and women in uniform, who we all support.

KOPPEL: Pelosi tried to reach President Bush by phone Wednesday to complain, but got his chief of staff instead.

Today, a White House spokeswoman defended the vice president, saying, Cheney's remarks were -- quote -- "absolutely not out of line," adding, the vice president was not in any way questioning anyone's patriotism. He was questioning the strategy -- Cheney's dig at Pelosi and Murtha part of an aggressive Republican campaign to lay the groundwork for the next battle with Democrats over funding the war -- the GOP accusing Democrats of advocating what Republicans call a slow-bleed policy to restrict supplies and reinforcements for American combat troops.

(END VIDEOTAPE)

KOPPEL: But Democrats point out the term "slow bleed" was actually coined by a reporter and then picked up by Republicans, who are now trying to use it as a political weapon.

Meanwhile, Wolf, Speaker Pelosi has yet to hear back from President Bush -- Wolf.

BLITZER: All right, Andrea, thank you very much. We're going to have more on this story coming up later, as well.

Up next: He was thinking of making his own run for the presidency, but now he's backing Senator Barack Obama. So, what made Tom Daschle change his mind? The former Senate Democratic leader joins us, right here in THE SITUATION ROOM.

Plus: a major government crackdown on undocumented workers. We are going to tell you who is caught in the sting -- that story in our next hour.

We will be right back.

(COMMERCIAL BREAK)

BLITZER: It's the first ugly clash of this presidential season, two titans in the race for 2008, at least their campaign staffs, going at it. And you can bet it won't be the last. Can Hillary Clinton and Senator -- and Barack Obama put their spat behind them?

Let's turn to our senior political correspondent, Candy Crowley.

What happened today? Yesterday, there was a huge uproar in the aftermath of Maureen Dowd's interview with David Geffen, the Hollywood mogul, who really blasted both Clintons, accused them both of being almost professional liars.

What happened today?

CANDY CROWLEY, CNN SENIOR POLITICAL CORRESPONDENT: Well, Barack Obama's campaign kind of went dark. They are back taking the high road: Listen, we -- the senator considers her a competitor and not an enemy. She is an ally in the Senate, will continue to be.

Camp Clinton, a little upset -- they don't -- they feel that Barack Obama is getting yet another free ride. They say: Listen, this is a guy who does know Geffen, who should have renounced what Geffen had to say. They go on to say: This is not this high-horse sort of campaign. This is a campaign of trash, and this sort of brought this to the forefront.

BLITZER: What do analysts think? Does this sort of feud have legs, as we say? Is it going to continue? Or are both of these campaigns going to move on?

CROWLEY: They're going to move on.

And, as you -- as you pointed out, they may move on to something else and find something else to argue about. We are, as everyone has said, a long way away from even the first caucus and the first primary. So, there will be other things down the road.

Whether this is the beginning of something is the real question.

BLITZER: Who wins and who loses in this initial spat?

CROWLEY: Well, it's funny. I was talking to Donna Brazile in the makeup room, and I asked her that very question. She said, oh, John Edwards, Chris Dodd, those are the people that win at this point, because, when you have the two top people going at each other, this leaves room for others to take kind of the gap that's right there and move into it.

So, in terms of who wins and who loses between the two of them, if you ask one camp, they will say they did. The other camp, obviously, they will say they did.

BLITZER: Because it makes the other candidates -- give them -- gives them an opportunity to take the high road, and let these two front-runners sort of duke it out.

CROWLEY: Absolutely. Absolutely.

BLITZER: What about this initial crisis management that Senator Barack Obama and his team had to endure? How did they do in this initial potential serious problem for them, when -- when Senator Clinton, her campaign, challenged them to repudiate the remarks of David Geffen in the Maureen Dowd column and to return the money that he raised, the million -- $1.3 million?

CROWLEY: Something that they ignored completely, the demand to return the money.

Look, this was classic, and they did it in a classic way. They had a campaign operative go out and slash back and say: Listen, it's sort of funny that they're -- they are accusing this guy of doing something wrong, when, in fact, he was in the Lincoln Bedroom and he used to raise a lot of money, and they didn't complain about him then.

And, then, they let Barack Obama go out there and say: Well, she's an ally, and I look forward to working with her in the Senate.

So, he took the high road all along. And they were slashing it out down here.

Still ahead here in THE SITUATION ROOM: The former Senate Democratic Leader Tom Daschle, he is here to explain why he is now supporting the Obama campaign.

Plus: They shared a stage in Nevada. Did any of the Democratic presidential hopefuls strike gold? J.C. Watts and Donna Brazile, they will talk winners and losers -- that's coming up in our "Strategy Session."

We will be right back.

(COMMERCIAL BREAK)

BLITZER: In the midst of Barack Obama's showdown with Senator Hillary Clinton, the Illinois senator picked up a powerful new supporter. He is the former Senate Democratic Leader Tom Daschle.

You have worked closely with Senator Clinton, Senator Dodd, Senator Biden, Senator Edwards. But you have decided to endorse and support Senator Barack Obama. What does he have that they don't?

DASCHLE: Well, it's not that they don't have it. I think they are outstanding United States senators, Wolf. And I think they would make great presidents.

I -- any one of the ones you have mentioned, I -- I know, from personal experience, they're solid legislators and solid leaders. And I feel very, very good about the tremendous team we have got.

BLITZER: But, in effect, you rejected them and went with Senator Obama. DASCHLE: Well, I didn't reject them. I simply said that I would like to help Barack, because I think he has got a unique ability to communicate with the American people, especially with younger people.

I remember, back in the '60s, when I was just beginning to be interested in politics and -- and government, how inspired I was by certain leaders at the time, the Kennedys and Martin Luther King.

I think Barack has some of that same magical ability to communicate, to connect, to unify, to inspire. And that's what I see in him. And...

BLITZER: So, what I hear you saying is, they don't necessarily have that magic, that unique ability to inspire young people.

DASCHLE: Well, they might. I -- I -- I'm not suggesting that they don't have that capacity as well.

But I see it in a very clear way with Barack. And, in large measure, because of that, I wanted to -- to work with him.

BLITZER: How did he handle this first direct confrontation between his campaign and the Hillary Clinton campaign over the David Geffen interview with Maureen Dowd?

Because he wrote a book, the bestseller, "The Audacity of Hope." He's putting forward this notion that he wants to be above this sort of ugly political back-and-forth. But some people are suggesting, you know, he didn't necessarily handle it all that well by refusing to directly repudiate David Geffen's very tough and, some would argue, ugly words about Hillary and Bill Clinton.

DASCHLE: Well, I like what he said yesterday. He said that the American people were far more interested in his position on health care, his position on Iraq, his position on jobs. And that is really where this debate ought to go.

Obviously...

BLITZER: But does he have a responsibility to...

DASCHLE: But David Geffen...

BLITZER: ... to say to David Geffen: "You know what?"

DASCHLE: David Geffen is...

(CROSSTALK)

BLITZER: "You were wrong. You called them both liars. You said that -- that the former president would bring a whole lot of baggage to this race"?

I mean, there's a lot of people who were very, very upset about David Geffen's very blunt criticism of both Clintons.

DASCHLE: Well, they have a right to be.

But David Geffen is not an official part of the -- the campaign. He doesn't work for them. He's a supporter. You can't be responsible for every comment made by supporters all over the country. You would be busy apologizing every single day.

I mean, the fact is that David Geffen has a right to express himself, even if we have just as much of a right to disagree. And that's, I think, what -- what Barack was saying.

(CROSSTALK)

DASCHLE: He isn't a part officially of this campaign, and let him speak for himself.

BLITZER: Senator Clinton is coming under a lot of criticism from some elements of the Democratic Party for not formally apologizing for her vote in -- in favor of that resolution authorizing the president to go to war in Iraq, formally -- and refusing to say she made a mistake.

You voted for that resolution. What do you think? Do you think, A, you made a mistake? Do you want to apologize? And should she?

DASCHLE: Well, there is a difference between saying you made a mistake and apologizing.

I have nothing to apologize for. I -- I made the best judgment I could, given the circumstances and the information we were provided. We now know how wrong it was.

So, was it a mistake? Absolutely. Every person who cast that vote has to live with it, has to decide how to deal with it. I have. Others have. But I don't think it warrants an apology.

BLITZER: Even though some others have apologized, some other candidates, Senator Edwards, and a few...

DASCHLE: I don't think he has apologized. I -- I don't know if he has...

BLITZER: Well, he said he is sorry he -- you know, he made that vote.

DASCHLE: Well, obviously, you regret it. But there is a difference between that and some sort of a formal apology, Wolf.

I -- I -- clearly, if -- if we had to do it -- and I have heard Hillary say this -- if you had the opportunity to -- to make the same decision, knowing now what we -- knowing then what we know now, of course you would make a different decision. You would probably not even have the vote. But -- but, you know, each person has to make up their own mind in that regard.

BLITZER: I -- I want you to also tell us about Senator Tim Johnson. As all of our viewers know, he had a brain hemorrhage. He had surgery. He's recuperating right now, senator from South Dakota, your home state, a very good friend of -- of yours.

Give us an update on how he is doing.

DASCHLE: Wolf, he is doing so well. I'm real encouraged.

He is -- he is actually doing some work from his room. He's communicating. He's -- he looks very healthy. And he has got every reason to believe that he will be back in the saddle, on the job, some time in the next several months.

BLITZER: We hope he is. We wish him a very speedy recovery, a very good guy.

Senator Daschle, thanks for coming in.

DASCHLE: You bet, Wolf. Good to be here.

BLITZER: Thank you.

DASCHLE: Thank you.

BLITZER: We are going to go back to Fort Lauderdale.

Howard K. Stern, the longtime -- actually, Larry Birkhead, the man claiming to be the -- the father of Anna Nicole Smith's baby, is speaking, together with Howard K. Stern, the longtime companion and lawyer.

Let's listen in to see their reaction to this judge's decision earlier.

(JOINED IN PROGRESS)

HOWARD K. STERN, ANNA NICOLE SMITH'S PARTNER AND ATTORNEY: All that mattered to me was that Anna's wishes were carried out, and that she is going to be with her son.

QUESTION: After all the acrimony in court, how is it you two are standing side by side right now?

LARRY BIRKHEAD, EX-BOYFRIEND OF ANNA NICOLE SMITH: I think it's just -- we all understand that we all loved Anna. And it's in our -- in her best interests to come together, and get this thing worked out for her best interests, and lay her to rest.

QUESTION: (OFF-MIKE)

BIRKHEAD: We're still in the process. Is that fair to say?

QUESTION: What has -- what has been decided about paternity and a paternity test for Howard K.?

BIRKHEAD: That is next.

(CROSSTALK)

DEBRA OPRI, ATTORNEY FOR LARRY BIRKHEAD: Not for today. Not appropriate for today.

(CROSSTALK)

OPRI: Let us hear from Virgie.

(CROSSTALK)

OPRI: Virgie would like to say something.

(CROSSTALK)

OPRI: Let Virgie say something.

Virgie, come on, the mother.

VIRGIE ARTHUR, MOTHER OF ANNA NICOLE SMITH: I don't know what to say.

OPRI: Speak from your heart. Speak from your heart, and clear and loud.

ARTHUR: I can't.

BIRKHEAD: You can't? Do you want me to say something for you?

ARTHUR: Yes.

BIRKHEAD: What do you want me to say?

ARTHUR: I don't know.

STERN: You don't have to say (OFF-MIKE)

BIRKHEAD: You don't have to (OFF-MIKE)

STERN: You don't have to (OFF-MIKE)

OPRI: You loved her?

BIRKHEAD: She just -- she...

ARTHUR: I loved with all my heart.

BIRKHEAD: She just said she loved her with all of her heart.

And I think what is most important is that we're all trying to work together to...

OPRI: And, on behalf of Howard, Virgie, and Larry, Larry will be seeing his daughter very soon at the funeral. And I just want to say thank you to Howard.

BIRKHEAD: Thank you guys for coming.

QUESTION: Is there going to be a funeral, a public funeral?

BIRKHEAD: We can't talk about that?

(CROSSTALK)

BIRKHEAD: No, no, no. No comment. No comment.

(CROSSTALK)

QUESTION: Is the show of unity right now any indication of things to come?

KRISTA BARTH, ATTORNEY FOR HOWARD K. STERN: Yes. I mean, everybody is working -- everybody is working together to arrange the details. And, hopefully, it will turn into what it should be, a very private family matter.

OPRI: That's -- that's everyone's wishes.

BARTH: You all can go home.

(CROSSTALK)

OPRI: Everyone is to work equally and together. And the parties and all the attorneys are in agreement. Anna deserves the best and the privacy that she sought.

QUESTION: Will she be buried in the Bahamas?

OPRI: Yes.

BARTH: Yes.

OPRI: And that's all we will say.

(CROSSTALK)

QUESTION: Krista...

(CROSSTALK)

QUESTION: Krista, are you saying it's going to be private funeral?

BARTH: I'm saying we're working out the details, but it's a family affair. You guys can go home.

(CROSSTALK)

BIRKHEAD: ... security to get out of here.

OPRI: OK. Now, step aside, and let one party leave.

(CROSSTALK)

OPRI: OK. Hold on. Larry, to the side. Step to the side. Step over here.

BLITZER: All right. We're going to leave that scene, a little chaotic there, in Fort Lauderdale.

But you did hear the respective parties all agreeing that Anna Nicole Smith, she will be buried in the Bahamas, presumably alongside her son, Danny, who died about six or eight months or so ago.

Once again, they all agreed. They came out together. Even though they are very much in dispute on other issues, on this issue, they have agreed with the judge that Anna Nicole Smith's body will be buried in the Bahamas, a very narrow decision.

We are going to continue to watch that. We are watching other stories as well.

When we come back, in our "Strategy Session," we will take a closer look at the latest showdown between Nancy Pelosi and Dick Cheney and other important issues.

That's coming up, right after this.

(COMMERCIAL BREAK)

BLITZER: Welcome back. Let's get some analysis now on what is going on, the latest showdowns not only involving Dick Cheney and Nancy Pelosi, but other issues as well.

Here is what he said recently on the administration's record on global warming. He says: "I would assess this administration's record on global warming as terrible."

He did say it's improving, but it's, basically, the record has been terrible.

Explain John McCain and his current stance to our viewers.

J.C. WATTS, CNN POLITICAL ANALYST: You know, the reason I like John McCain is because John McCain is going to be John McCain. I think he calls it the way he sees it.

And I kind of like that independence. I -- you know, we talk a lot about saying that we want people that will be independent. In Washington, that usually means we want someone that agrees with us. And -- and John McCain, I think, on environmental issues -- I don't necessarily agree with him on the global warming issue. I think, you know, you can make arguments on both sides of that debate. But -- but John is being John.

BLITZER: He's very supportive of the president, when it comes to the war in Iraq, the surge. He supports that.

But he also said this a couple of weeks back. He said: "The president listened too much to the vice president. Of course, the president bears the ultimate responsibility, but he was very badly served by both the vice president and, most of all, the secretary of defense."

And, in response, to ABC News, he said this, the vice president: "I think, if" -- well, that's another matter. But let's -- he did say that, when he did run into John McCain, John McCain apologized to him for having said that.

DONNA BRAZILE, CNN POLITICAL ANALYST: Well, first of all, it looks like I am going to have to give J.C. Watts a copy of "An Inconvenient Truth" right after Al Gore wins the Oscar this weekend...

(LAUGHTER) BRAZILE: ... because the science is very conclusive on that.

But, look, I think John McCain is trying to regain his title as the maverick, as the straight-shooter, the one who could -- can talk directly to the American people. He's lost a lot of credibility over the last couple of months, as he has defended the president's position on escalation of the troops in Iraq.

And I think what McCain is trying to do is to regain that maverick label, where he can go out there, speaks the truth, talk about difficult issues, and try to distinguish himself from the White House.

(CROSSTALK)

BRAZILE: At the same time, he is bending that right knee to the religious right.

WATTS: But -- but, Donna, we can disagree, or -- or you might be able to disagree with Senator McCain on the surge, but people need to know, that was John McCain's position from day one. We needed more troops.

So, this isn't new. This is actually the administration following John McCain's lead, in -- following his lead, in terms of the troop surge.

BLITZER: All right. Let me -- let's get into this latest spat between Vice President Cheney and Nancy Pelosi, the speaker -- Cheney saying the other day: "I think, if we were to do what Speaker Pelosi and Congressman Murtha are suggesting, all we will do is validate the al Qaeda strategy to break the will of the American people, try to persuade us to throw in the towel. And then they win because we quit" -- to which Nancy Pelosi replied today -- let's listen to hear what she said, because this is what she said.

(BEGIN VIDEO CLIP)

PELOSI: The vice president's statements are beneath the dignity of the debate that we're engaged in. They're a disservice to our men and women in uniform, who we all support.

And you know what I'm going to do? I'm going to call the president and tell him I disapprove of what the vice president said. That has no place in our debate.

(END VIDEO CLIP)

BLITZER: All right, J.C., what do you think?

WATTS: Well, I -- I think, you know, it's -- I can understand her saying that it's beneath the vice president. But I think it's also beneath us to say that the president is a liar, the president misled us, all of those things. There's no -- there shouldn't be any room in the discussion for any of the comments like that. But, Wolf, let me tell you something. There's going to be somebody on the -- Democrat tomorrow that will say something that we could be on this show saying, that is beneath their office.

Unfortunately, that's politics. I don't like it...

BRAZILE: Well...

WATTS: ... but that happens.

BRAZILE: Well, there is a lot of insult to go around.

But, look, the truth of the matter is, J.C., is that, every time the administration's critics stand up and say they disagree with the president on the strategy, they disagree with the way in which he has conducted the war, somehow, someone questions their patriotism.

And I think what Speaker Pelosi said today was that we Democrats and those 17 Republicans have every right to criticize this administration's handling of the war, and also call for its -- the troops to come home.

BLITZER: We have got to leave it there, guys.

(LAUGHTER)

BLITZER: Hold your fire, because we will -- we will have plenty of time down the road, guys. Thanks very much.

(CROSSTALK)

BRAZILE: Global warming.

WATTS: I want a rebuttal.

(LAUGHTER)

BRAZILE: Global warming. Global warming.

BLITZER: Next time.

(LAUGHTER)

BLITZER: Donna and J.C., appreciate it.

(LAUGHTER)

BLITZER: Still to come here in THE SITUATION ROOM: Has President Bush warmed up to global warming? If so, what does he plan to do about it? His energy secretary, Samuel Bodman, standing by live to join us.

Also: Michael Ware on a disturbing new trend in attacks in Iraq.

Stay with us. You're in THE SITUATION ROOM.

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